Wednesday, December 14, 2011

American Airlines, Bankruptcy, and the Housing Bubble : The New Yorker

"Recently, American Airlines filed for bankruptcy, it did so deliberately. The airline had four billion dollars in the bank and could have kept paying its bills. But it has been losing money for a while, and its board decided that it was foolish to keep throwing good money after bad. Declaring bankruptcy will trim American’s debt load and allow it to break its union contracts, so that it can slim down and cut costs.

American wasn’t stigmatized for the move. Instead, analysts hailed it as “very smart.""

What are your thoughts? Good move? What will be impact on future borrowing? Relations with others stakeholders?